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The Enhancement Effect of Corporate ESG Performance on Corporate Performance: An Empirical Study Based on Listed Companies on China’s A-Share Market

In: Proceedings of the 9th International Conference on Financial Innovation and Economic Development (ICFIED 2024)

Author

Listed:
  • Yang Ge

    (Soochow University)

Abstract

The degree of openness of China’s capital market has deepened continuously over the course of more than four decades of reform and opening up. The Chinese market environment has gradually converged with international markets, and numerous new concepts and ideas have been reshaping the domestic market landscape. This paper focuses on the emerging corporate evaluation approach known as Environmental, Social, and Governance (ESG) performance and investigates its impact on corporate performance. Principal Component Analysis (PCA) is utilized to develop a Corporate Governance Index, enabling a systematic quantification of corporate governance efficacy. The study explores the influence of ESG factors on corporate performance and their underlying mechanisms. Additionally, this paper utilizes a sample of non-financial companies listed on the Shanghai and Shenzhen A-share markets from 2010 to 2021 to empirically examine the impact of ESG performance on corporate performance. The research found that the ESG performance of Chinese enterprises will affect the improvement of corporate performance. The better the ESG performance, the higher the company’s return on total assets and the higher the total factor productivity.

Suggested Citation

  • Yang Ge, 2024. "The Enhancement Effect of Corporate ESG Performance on Corporate Performance: An Empirical Study Based on Listed Companies on China’s A-Share Market," Advances in Economics, Business and Management Research, in: Khaled Elbagory & Zefu Wu & Hamdan Amer Ali Al-Jaifi & Shafie Mohamed Zabri (ed.), Proceedings of the 9th International Conference on Financial Innovation and Economic Development (ICFIED 2024), pages 113-124, Springer.
    • Handle: RePEc:spr:advbcp:978-94-6463-408-2_14
    DOI: 10.2991/978-94-6463-408-2_14
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